YORK Et Al. v. RES-GA LJY, LLC
336 Ga. App. 253
| Ga. Ct. App. | 2016Background
- From 2005–2009 TCB made loans to entities affiliated with York and Drillot; loans were secured by promissory notes and security deeds on several Georgia parcels.
- York and Drillot signed commercial guaranties promising to "guarantee full and punctual payment" of the indebtedness; the notes and guaranties were later assigned to RES‑GA LJY, LLC.
- Borrowers defaulted; RES‑GA foreclosed and purchased the collateral at prices below the loan balances and sought judicial confirmation of the foreclosure sales, but county courts refused confirmation and this Court affirmed on appeal.
- OCGA § 44‑14‑161(a) bars a lender from obtaining a deficiency after a nonjudicial foreclosure unless the sale is timely reported and confirmed; RES‑GA concedes it cannot recover a deficiency from borrowers because it failed to obtain confirmation.
- RES‑GA sued the guarantors for the deficiency; it moved for summary judgment on the theory the guarantors waived the confirmation/anti‑deficiency defense in their guaranties; the trial court granted summary judgment for RES‑GA and the guarantors appealed.
Issues
| Issue | Plaintiff's Argument (RES‑GA) | Defendant's Argument (York/Drillot) | Held |
|---|---|---|---|
| Whether guarantors waived the confirmation requirement under OCGA § 44‑14‑161(a) | Guaranties expressly waive "any and all rights or defenses based on suretyship" including statutory anti‑deficiency/confirmation defenses, so RES‑GA may recover deficiency from guarantors | The confirmation defense is statutory foreclosure law, not a defense "based on suretyship," so it was not waived | Waiver valid; confirmation requirement is a condition precedent but may be contractually waived; summary judgment for RES‑GA affirmed |
| Whether the guaranties are contracts of suretyship and how to construe waiver language | Guaranties are surety contracts; waiver language is broad and unambiguous and should be enforced according to plain meaning | Guarantors urge strict construction and a narrow reading that would exclude the confirmation defense | Court: guaranties are suretyship contracts but construing intent is a question of law; the plain language covers defenses arising from suretyship, including confirmation defenses, so waiver applies |
Key Cases Cited
- Community & Southern Bank v. DCB Investments, 328 Ga. App. 605 (2014) (summary judgment standard and prior ruling that guarantor may waive confirmation requirement)
- RES‑GA LJY v. Y. D. I., Inc., 322 Ga. App. 607 (2013) (prior appellate decision involving related foreclosure/confirmation issues)
- HWA Properties v. Community & Southern Bank, 322 Ga. App. 877 (2013) (recognizing guarantor may waive confirmation requirement)
- Citrus Tower Boulevard Imaging Center v. David S. Owens, MD, PC, 325 Ga. App. 1 (2013) (principles for interpreting surety/guaranty contracts; intent controls construction)